Staying Wrong Isn’t Right
All bullish moves, regardless of the length of their duration, usually begin
at a lower level where the average stock buyer is afraid to jump in. If you know
what you are looking at, however, you can piece together the action after the
first move up, and take advantage of a pause before committing.
12:20:47
Applebee’s (APPB)
is setting up in a meltdown Bow Tie. APPB is down 0.45 to 28.45 and has a 3-month
relative strength ranking of 87 from TradingMarkets.com.
Yesterday this was profiled as a potential short candidate, but
looking at it in light of today’s action I see I missed some things. Since the
overall trend was down, the short side was the way to be leaning, but the setup
did not trigger and actually is moving higher this morning. Also notice the
double bottom at the 78.6% retracement of the low to high.
The action is starting to make the chart look more bullish, as
it is forming a right shoulder to go along with the inverted head. I like to go
back and look at charts over several days because I will often spot things I
missed earlier. Here is a case where I did miss some clues. However, one of the
most important lessons here is how important it is to wait for confirmation of
signals before entering. By doing so in this case, you would have never entered
and saved yourself a loss. In trading, it is not a crime to be wrong. The big
mistake many traders make is refusing to admit when they are wrong. You will be
on the wrong side at times – just do not stay there.
Have a great weekend!
Duke
P.S. Only one week away to TM2001! Hope to see you there.